Want to Lose Weight? Try Paying Cash at the Grocery

If eating healthier and maybe shedding a few pounds are contenders for your New Year's resolution list, keep the credit card and debit card at home when grocery shopping, and stick with cash. In a new academic study, researchers studied the spending patterns of 1,000 grocery-store shoppers and found that folks paying with cash bought fewer junk food items (candy, cake, etc.) and more "virtuous" foods (veggies, milk, etc.). The researchers found the same pattern in an experiment where shoppers were asked to fill a virtual grocery cart. I shudder to think what the San Francisco Board of Supervisors -- which recently banned Happy Meal toys at fast food restaurants in the name of fighting obesity -- might do with this information.

Not only did people paying with credit buy more junk food, they also ended up spending an average of 30 to 40 percent more overall than the cash crowd. Hmm...sticking with cash at the grocery store not only helps your waistline, it might also help your bottom line.

The Pain Factor
This new study dovetails with what behavioral economists have been circling around for years: The more abstract the form of payment, the less sensitive we are to what we are spending. Paying with plastic is a less visceral experience than handing over cold, hard cash from your wallet. The behavioral econ folks have dubbed this the "pain of payment" phenomenon. When the form of payment is more immediate and tangible -- dollar bills rather than plastic -- we feel that pain more.

As Dan Ariely, author of The Upside of Irrationality, explained in an interview with bigthink.com: "If you go to a restaurant and you are paying cash, you would feel much worse than if you were paying with credit card. Why? You know the price, there's no surprise, but if you're paying cash, you feel a bit more guilt. It's a bit more difficult. It's more painful." In other words, cash hurts so good. What's interesting in this latest study is that using cash over credit cards also impacts what we spend money on, since paying with cash seems to strengthen our overall impulse control. Here's Ariely talking to MoneyWatch about how to spend and save smarter in general.

Keep the debit card tucked away as well. The team of three researchers found that debit cards were psychologically no different than using a credit card. It's still an "abstract and emotionally inert" mode of payment compared to cash.

Hit the grocery store on your day off. According to the researchers, "consumers shopping on weekends are less likely to be impulsive. This could be because of the shopping list effect: weekend shopping trips tend to be based on shopping lists, and therefore purchases on such trips are less susceptible to impulsive urges."

Use big-denomination bills. Another study that looked at consumer spending in general found that we are better at curbing our urge to splurge when we have large denomination bills in our wallet. So next time you're heading out to the grocery store, or shopping mall, stick with the Benjamins.